COSTLY OVERTIME MISTAKES

By: Elaina Smiley

One of the biggest mistakes an employer can make is assuming that because an employee is paid a “salary” that no overtime pay is necessary.  Under the Fair Labor Standards Act, there are only certain categories of employees who are exempt from overtime pay.  In determining whether an employee qualifies as exempt from overtime pay, the job duties of the particular employee must be carefully considered.

Other potential overtime problems include:

• Not properly counting all time worked for purposes of overtime pay.  Employers are responsible for keeping accurate records of all work time. If the employer fails to track actual hours worked, a court may approximate damages based on the employee’s evidence of the amount of overtime they worked.

• Permitting employees to work “off the clock”.  For instance, when an employee “voluntarily” comes in early or stays late to “catch-up” on work, this time is compensable and must be counted for overtime purposes.

• Granting “comp time” in lieu of overtime is not permissible.  Employers must pay overtime for non-exempt workers for all hours worked in excess of 40 hours per week.

• Failing to include all required compensation paid to the employee in calculating the regular rate for purposes of overtime.  For instance, certain bonuses and/or commission payments may need to be considered in calculating overtime.

Failure to follow these rules can lead to severe legal penalties if an employee files a legal claim or in the event of a Department of Labor audit.  Some penalties include double damages for unpaid wages for up to 3 years for willful violations, liability to pay the employee’s attorneys fees and potential civil penalties assessed by the Department of Labor.

Elaina Smiley is a partner at Meyer, Unkovic & Scott LLP and specializes in Employment and Immigration matters. es@muslaw.com